Provident Living: Budgeting, part 4

As a sum up to my posts about budgeting (see the last post here), I’m including two tips I have heard lately about budgeting.  One was a comment on my last post from my cousin Shanna:

I will tell you what has worked for us- fewer categories and using cash. I hate checking the budget very often, and I don’t keep up with it. Before that meant that we would go over, just like you said. So we have a new system- we have only 3 categories in our budget: Bills, savings, spending. We figured out all the categories, etc. one time, then grouped them into one of those categories. Every paycheck, I pay any bills that come in, I put the designated amount in the savings acct, then we take our designated spending amount out in cash. Once I have the cash, I don’t worry about what category it is in- it is just our spending money for 2 weeks. I will sometimes save some out if I know a holiday or some big expense is coming up, but mostly we just have that amount to spend. We get new cash every 2 weeks. It is so simple and easy, and we have cut our spending way back.

I hope all that made sense!

I do sometimes tend to make things slightly more complicated than they have to be.  So if you have trouble even starting a budget, simplify!  Take baby steps!  Just do something!  Do whatever works for you.  So thanks, Shanna, for simplifying the whole budgeting process.

And the other tip I heard was from my friend, Mrs. Mordecai.  I heard her talking once about being frugal and the one thing she said that really stuck with me was that even if you can great a great deal on something, it’s still money spent.  So if you don’t go anywhere (and I would add don’t shop on the internet as well), then you don’t buy anything.  Pretty simple as well.

Provident Living: Budgeting, part 3

See my first two budgeting post here and here.

Now we are getting to the hardest part of budgeting.  First, we figured out the most important categories–where we should put our money first–and then we added a few miscellaneous categories.  Now that we have added up the total and it equals what we make, we have to actually keep our budget up.  And that’s hard.  I usually visit my budget once a week to update it and make sure that I know where my money is going.  For some people, once a week is not enough.  I talked to one girl last night and she said she has to update hers daily so she knows exactly how much money she has to spend.

Why is budgeting important?  If you know where your money is going, you can stay out of debt.  And if you can put a little away in savings for a rainy day, you can avoid putting emergencies on credit cards where the interest is high.

So set up a budget, and then update it frequently.  You will find you might save a lot more money when you actually know where it is going.

(If anyone has any brilliant ideas on how to teach this during an Enrichment evening, I would love to hear them.  Leave me a comment!)

Provident Living: Budgeting, part 2

See my last post about budgeting here.

Now that you have figured out your most important categories and have totaled them up (and remember, the total has to equal less than what you earn), you can start figuring out how much money you have for miscellaneous categories.  (ie–FUN categories.)  However, these fun categories still have to fit within your income.

Like I mentioned, ours include entertainment, hobbies, home improvements, vacation, and saving for Christmas.  Each of these categories have been made into what we call “rolling categories.”  That means that if we don’t spend all the money we have allocated each month in that category, it rolls into the next month.  For example, if we have $50 in our entertainment budget, but we only eat out once and it costs us $25, then we take the $25 and roll it into the next month.  So next month we have $75 to spend on entertainment ($25 from last month and a new $50 from the current month).

We do rolling categories for a number of different things:

• Car Insurance:  I hate having to budget for car insurance because it is such a big hit to our budget every six months.  But with a rolling category, we save a little every month towards it and when the bill comes, we are prepared with all the money.
• Clothing: We rarely spend a little on clothing every month–rather, we spend a lot at once
• Home improvements:  These are improvements we want to make on our home–painting, landscaping, tools for Scott to work on the house, etc.
• Home association fees: Once again, I hate to have this bill hit our budget all at once.  Especially because it comes in December
• Hobbies: This is for things that Scott and I want for our leisure activities.
• Vacation: We don’t always have a vacation in mind, but we have money saved for when we do.
• Giving: This category is for if we want to donate outside of tithing and fast offerings.  It can include donating to charities that we feel strongly about or donating money back to our university.  Most often for us, it includes buying really expensive cookie dough from the neighbor kids who are selling it for their elementary school.  Or buying Girl Scout Cookies, Entertainment books, helping boys out with Scouting money, etc.
• Christmas: As Dave Ramsey says, “Christmas is not an emergency.”  It comes on the same day every year.  There is no reason to go into debt for Christmas.  So we save every month over the course of the year so that we can have money to spend for Christmas.

Provident Living: Budgeting

Everyone is looking for ways to save money…and the easiest way is to budget.  Those who have a budget will agree with me.  Those who don’t–don’t understand how it will help them save money.  The reason to have a budget is to know exactly how much money is coming in and how much money is going out.  It regulates the flow of your money.

So if you don’ t have a budget, how do you start one?  There are a few websites out there that sell budgeting software:  PearBudget, You Need a Budget (YNAB).  You could use a search engine and find a few more options.

What Scott and I use is a spreadsheet in Excel.  I’ve blogged about it before here.

To set up a budget, simply figure out what your income is during a month.  Then figure out what your top priority categories are.  For us, these are tithing,  fast offerings, mortgage, utility bills, savings,  food, clothing,  phone, gasoline, and insurance.  Write down how much each costs in each category.  Make sure these total less than your income.  If they total more than you earn, you have to adjust the numbers   If you can’t adjust the numbers, you need to make some decisions about your lifestyle.  You either need to find another job that pays more or you need to decrease the amount of your bills.  Do you need to move to drop your rent or mortgage?  Do you need to buy fewer groceries?  Do you need to drive less in order to spend less on gasoline?

If you have income left over after you add up your most important categories, then you can add optional categories.  For Scott and I, these include entertainment, hobbies, home improvements, vacation, and saving for Christmas to name a few.

Your homework  is to prioritize your categories…what are your most important budget categories?

Provident Living

I was fortunate enough to spend about three months doing a service study abroad in Paraguay about six years ago. While I had previously been in other poor areas of the world, this one was the first time that I really decided that I needed to teach myself how to help my future family be self-reliant. In other words, I wanted to do and learn all I could about provident living.

In Paraguay, my friend and I taught a how-to-find-a-job workshop using a program from LDS Employment Services. While we did assist a few people in finding jobs, the workshop was really an Americanized program. I remember the first time we talked about negotiating salary and the students really jumped on us for that one. Apparently you don’t negotiate salary the same way you do here. But like I knew that…in fact I had never negotiated salary…and in fact I still never have negotiated salary. But that’s beside the point…

Anyway…what did seem to be the best approach was to help people start microbusinesses. The idea being that they could start something very small out of their own homes and start making money that way. For example, one family was given two chickens…one chicken’s eggs were to supplement the family diet and the other’s were to sell. Another family might purchase some ingredients to make chipas–a bagel-like bread–to sell to people who ride the buses. One lady might sew clothes or embroider nanduti–a lace made by the Guarani Indians in Paraguay (see the following picture.) One man carved beautiful figurines out of clay. (I bought a nativity set for me and one for my mom.)

After visiting several homes where eight-ten people lived out of two rooms and seeing the poverty that pervaded the country, I made a decision to do what I could to be self-reliant. I came home and that Christmas, I asked for a sewing machine so that I could learn to sew. I suppose I thought that I could at least learn how to keep my family clothed.

After moving here about two years ago, one of my first callings in this ward was the Provident Living specialist. I really started learning more and more about food storage–the main part of my calling. I organized enrichment evenings where we canned rice in #10 aluminum cans. We taught provident living tips.

Now with the economy being the way it is, I think people are interested in learning how to live more frugality. We are seeing the effects of living with debt…something the prophets have counseled against for years. We are seeing how fragile the economy in our world is and how quickly jobs can be shed.

Starting this week, look for a provident living tip along with my usual parenting tips. I will probably start with food storage, but I am sure I will mix it up with frugality and anything else that relates to provident living.

But just remember…we are so blessed living where we do!!! I can’t even tell you about the poverty I’ve seen—NOTHING I know here compares to what people in poorer parts of the world have to face. If nothing else, I am grateful for the temporal and spiritual blessings I have.